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U.S. and Canada have rough history regarding timber

Distribution & Logistics
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It’s a battle that has lasted since the Reagan administration and one that may not be concluded anytime soon.

The war over lumber imports from Canada has risen back up to the spotlight after the U.S. Department of Commerce imposed a preliminary subsidy duty on Canadian softwood lumber products at an average of 20%.

President Donald Trump tweeted the day after Perrin Beatty, president of the Canadian Chamber of Commerce, was in South Carolina that “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!”

The preliminary duties were a response to Canadian officials' “restricting imports of U.S. highly filtered milk protein products” used mainly to make cheese, according to a report from Reuters.

“The most important thing is not to respond to the most recent tweet and to respond to facts,” Beatty said.

Canada exported $215 million worth of wood pulp products to South Carolina, along with $470 million in rubber and rubber parts in 2016.

The root cause for the hostility between the nations is the issue of Canadian timber companies using government subsidies, because a majority of the timber harvested is on government-owned land. U.S. timber advocates call the subsidies unfair and suggest U.S. businesses simply cannot compete.

Cameron Krauss, senior vice president of legal affairs for Oregon-based Seneca Sawmill and the chairman of the U.S. Timber Coalition’s legal committee, said the decision to preliminarily tariff, along with the Department of Commerce considering claims that Canadian companies “dump” their timber in the United States, was a welcome decision.

“This confirms that Canadian lumber mills are subsidized by their government and benefit from timber pricing policies and other subsidies which harm U.S. manufacturers and workers,” Krauss said in an statement issued following the Commerce Department’s decision to issue the tariff.

One who is all too familiar with the continuing timber battle between Canada and the United States is former U.S. ambassador to Canada, David Wilkins. Wilkins, who was appointed by President George W. Bush in 2005 and served as ambassador to Canada until 2009, is an attorney with Nelson Mullins Riley & Scarborough LLP in Greenville.

“The dispute had been going on for a decade and we had been collecting nearly $5 billion in tariffs,” Wilkins said. “Canadians were taking the matter to litigation.”

In 2006, the American and Canadian governments brokered a deal that set aside years of litigation between the two over timber and Wilkins advised Bush during the negotiations. He said the contention that the playing field is unfair for U.S. timber producers is justified.

“It does have merit, otherwise the Commerce Department wouldn’t have put preliminary tariffs on it,” Wilkins said. “Certainly not in every case.”

He said a third of South Carolina’s lumber currently comes from Canada, so there could be an impact on homebuilders who use the softwood to frame new construction.

As potential summer talks surrounding the North American Free Trade Agreement start to heat up, the timber issue could be a factor in those talks, or it could be set aside and dealt with on separate terms.

“The answer is not litigation because that will raise the price of Canadian timber which has an impact on homebuilders,” Wilkins said. “Leaders will have to exercise some political capital and find some middle ground.”

Reach Matthew Clark at 864-720-1222.

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